Colombia

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Eurasia Group founder and emerging markets guru Ian Bremmer has come around to the view that the BRICS construct is nothing more than a bunch of countries “united by a catchy acronym” and little else. His op-ed piece in last Friday’s New York Times notes that Brazil, Russia, India, and China “have formalized their club and extended their reach by inviting South Africa to join” – a development that occurred in December of 2010 and asks, “But do their meetings and joint statements really allow them to punch above their individual weight? What do these countries share beyond a common interest in bolstering their global clout?” Several hundred words later he concludes that these five countries “will sometimes use their collective weight to obstruct U.S. and European plans. But the BRICs have too little in common abroad and too much at stake at home to play a single coherent role on the global stage.” Has he been reading my blog? [click to continue…]

If any event could illustrate the fragility of the BRICS conceit, it is the recent blackout in India, which left as many as 600 million people without power for up to two days. More than anything else, it reveals the sorry state of India’s governance. Yes, there are some extenuating circumstances: an unusually hot and dry monsoon season, which has reduced the available flow in hydroelectric plants while also causing the wealthy to use more power to run their air conditioners, while at the same time farmers are using more power to run pumps bringing up irrigation water from deep wells.

But the real story is under-investment in power generation, in coal production, and in transmission and distribution infrastructure, which in turn are attributable to monopoly pricing, hugely inefficient subsidies, endemic corruption, and political stagnation. The power outage was unique only in its extent and duration. Businesses, households, and public institutions all rely on diesel generators, which to a large extent have gone from a backup to the primary source of electricity, as “load shedding” – the system of rolling blackouts that utilities impose to reduce the strain on an overtaxed network, which often deprive whole areas of a city of power for as much as 14 hours a day. The event, and the global publicity it has attracted, has put a dent in India’s self-image as a nascent superpower. India has nuclear weapons and a space program – it launched a lunar probe in 2008 and has announced plans to send an orbiter to Mars next year – but it can’t keep the lights on. [click to continue…]

The global bank HSBC, in its Business Without Borders newsletter, tells us that while the past decade was all about the BRIC countries – Brazil, Russia, India, China – we are now in the decade of what it has dubbed the CIVETS, which stands for Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa, a set of countries “whose rising middle class, young populations and rapid growth rates make the BRICs look dull in comparison.” I have previously made the point – that BRIC, while a useful shorthand for a set of big emerging economies, makes no sense as an actual group, even as BRIC summits have taken place (in which South Africa was invited to join, adding the “s” to make up BRICS) and BRICS investment funds have been established. There is little, if anything in the way of common features or shared interests to unite the BRICs countries. Russia and China are authoritarian states, while Brazil and India are noisy democracies. Brazil and South Africa, both big agricultural exporters seeking freer trade, have little in common with India, which protects its farmers with high tariff barriers. Russia, whose economy is based largely on energy exports, has little in common with China, a net oil importer. China, with over 1.3 billion people, is more than 25 times bigger than South Africa, population 50 million. But the BRICS are a model of solidarity when compared to the CIVETS.

Organizing the CIVETS into a coherent group could be as difficult as, well, herding cats. Not inappropriate, since the word civet is also used to refer imprecisely to a number of cat-like creatures of different genii and species. The more fundamental problem is that CIVETS by necessity excludes certain countries that should merit inclusion but which don’t fit the linguistic straitjacket. According to the HSBC article, “the six countries in the group are posting growth rates higher than 5% — with the exception of Egypt and South Africa – and are trending upwards. Lacking the size and heft of the BRICs, these upstarts nevertheless offer a more dynamic population base, with the average age being 27, soaring domestic consumption and more diverse opportunities for businesses seeking international expansion.” So why is Thailand (population 69 million, forecast 2012 GDP growth of more than 6.0 percent, median age 34) excluded? Egypt’s poor economic performance can be considered temporary fallout from the Arab Spring upheavals, but what about South Africa, which in the nearly 18 years since the advent of majority rule has chalked up an average annual GDP growth of 3.3 percent? For that matter, why exclude Bangladesh (150 million people, median age 23, GDP growth averaging 6.0 to 8.0 percent)? Or Nigeria (140 million people, average 6.9 percent GDP growth since 2005, median age 19)?

One problem with the CIVETS designation, which almost guarantees that it will never catch on, is that it’s hard to add new countries or eliminate laggards from the group without ruining the catchy acronym. This is why over a year ago I suggested replacing BRICS, CIVETS, and other similar groupings with a more flexible term, which allows for countries to be added or taken out as they fall behind or graduate, namely, BEEs, for Big Emerging Economies. The real standouts in that group could be called Killer BEEs. I’m still waiting for it to catch on.